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By Camillus Eboh
ABUJA, Jan 17 (Reuters) - Nigeria plans to talk to
concessionary lenders about 850 billion naira ($2.8 billion) in
external borrowings earmarked in its 2020 budget, the head of
the debt office said on Friday.
"The 850 billion naira does not mean Eurobonds. We will
still talk with concessionary lenders," Debt Management Office
Director General Patience Oniha told reporters.
Nigeria has been borrowing to fund growth after a 2016
recession slashed income and weakened its currency. The
government is now seeking to raise revenues through value-added
tax hikes, but the cost of debt service is also rising.
Oniha said the strategy is to seek concessionary loans first
due to the lower interest rate and longer maturities, and any
shortfall might be raised from commercial sources.
Nigeria has budgeted to spend 10.59 trillion naira ($34.6
billion) for 2020, which assumes a deficit of 1.52% of the
estimated gross domestic product - around 2.18 trillion naira -
to be funded through foreign and domestic borrowing. The debt office said Nigeria has a debt-to-GDP ratio of
18.47% - below its limit of 25% and comparing favourably with
those of developed countries, some of which are above 100%.
However, Nigeria, Africa's biggest economy, spends more than
half of its revenues in debt service, the debt office said.
Total public debt rose to 26.2 trillion naira as of
September, up 16.88% from a year earlier. The debt office said
it has managed to stretch out the maturity profile of its
borrowings in favour of longer term debt.
For new local financing, the debt office said the government
would issue 150 billion naira worth of sukuk this year, in
addition to bonds and treasury bills.
In a presentation seen by Reuters on Thursday, the debt
office said it would introduce a 15-year maturity for the first
time and sell a new 30-year bond, after launching the tenor last
year, to extend the maturity profile of its debt. Last year, foreign investors cut their participation in
Nigerian government bond auctions after yields fell and an oil
prices drop reignited fears that the currency could come under
pressure.
Yields have fallen from as high as 15% to around 11% for the
benchmark 10-year bond.
(Additional reporting and writing by Chijioke Ohuocha
Editing by Mark Heinrich)